Powering ahead

21 February 2018 By Clara Ferreira Marques

Full-year results show the $9 bln Australian gas producer is on the mend, with a narrowing net loss, less debt and more cash. That vindicates last year’s rejection of an opportunistic bid. The next challenge is shifting focus to growth – which could send Santos hunting for deals.

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Santos, Australia’s second-largest independent gas producer, reported full-year adjusted EBITDA of $1.43 billion on Feb. 21, up 19 percent but shy of market expectations because of a foreign-exchange loss. The measure, which Santos calls EBITDAX, excludes depletion, exploration, evaluation and impairment charges.

Its net loss narrowed 66 percent to $360 million. Santos said free cash flow tripled to $618 million and net debt came down 22 percent, but did not declare a dividend.

By early afternoon in Sydney on Feb. 21, Santos shares were trading at A$5.04 ($3.97), compared to an August takeover proposal from private equity-backed Harbour Energy of A$4.55.

The Australian Financial Review reported in November that Harbour was preparing a fresh bid at A$5.30. The company said on Feb. 21 there had been no contact with Harbour.

Santos also said it was in talks with Chinese shareholder ENN Ecological to form a liquefied natural gas joint venture to supply China, the world’s second-largest LNG importer behind Japan.

Context News

Its net loss narrowed 66 percent to $360 million. Santos said free cash flow tripled to $618 million and net debt came down 22 percent, but did not declare a dividend.

By early afternoon in Sydney on Feb. 21, Santos shares were trading at A$5.04 ($3.97), compared to an August takeover proposal from private equity-backed Harbour Energy of A$4.55.

The Australian Financial Review reported in November that Harbour was preparing a fresh bid at A$5.30. The company said on Feb. 21 there had been no contact with Harbour.

Santos also said it was in talks with Chinese shareholder ENN Ecological to form a liquefied natural gas joint venture to supply China, the world’s second-largest LNG importer behind Japan.

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